Changing How Universities Spend Money, the Problem with Rankings and Identifying Government's Enemy

Plus: The impact of postponed retirement and more management news

This summer, Arizona offered some state employees a 5 percent pay bonus if they became “at-will” employees, giving up many civil service protections. It was kind of a surprise to us to see that some 38 percent of state employees took the offer, according to Yuma News Now.

So, here’s the question for B&G Readers with civil service protections. Would you take the deal? Why? (Or why not?) Email us your thoughts.

Tying higher education funding to increased graduation rates or student retention has been the goal in a number of states. But can state governments generate change in public schools’ priorities by adopting performance-based funding? A study at the University of Oklahoma by researcher Thomas Rabovsky answers with a qualified yes. Rabovsky looked at states with and without performance funding policies to gauge their impact.

While Rabovsky found that these policies didn’t have an impact on how much of the state budget was allocated to individual institutions, it did influence how universities spent their money. If states made it clear through their performance targets that undergraduate education was a priority, colleges and universities steered more money toward instruction and less toward research. “The policies give strong signals about state priorities and institutions are responsive to that,” Rabovsky told us.

For some time, we’ve been wondering what impact postponed retirement for older government workers has had on young workers. If employees stay in their jobs longer, will they crowd out young applicants? Now we have an answer. A new study from the Center for Retirement Research at Boston College shows no negative impact whatsoever. So that’s one less thing to worry about.

According to the National League of Cities’annual report on fiscal conditions, 43 percent of cities have raised user fees in the last year. We called Michael Pagano, co-author of the report and dean of the University of Illinois at Chicago’s College of Urban Planning and Public Affairs, to help us flesh out our understanding of the topic. He had a lot to say, but what we found most interesting is the idea that user fees are increasingly being used as a way to yank some cash out of generally untaxed nonprofits like churches, hospitals and universities.

For example, according to Pagano, Houston began levying a drainage fee last winter, billing entities for every square foot of hard surface parking lot. The justification is that these lots tend to drain unsupportable amounts of water into the sewer systems and that winds up costing the city money. Among the groups most affected by the fee were Houston’s mega-churches, which pushed back against the change, but the City Council forged ahead. We think the Council’s willingness to override the church is a pretty dramatic sign of the attraction of user fees in times of economic stress.

Surprises are the enemy of smoothly functioning governments. Yet it’s astonishing how frequently huge fiscal problems seem to strike towns and cities like lightning in a seemingly clear sky. In order to avoid this kind of thing, New York state’s comptroller has proposed creating an “early warning system” to help identify financially troubled communities before they come close to the brink of bankruptcy.

The comptroller’s system will rely on nine financial indicators, including cash on hand, operating deficits, use of short-term debt and demographic trends. Other state officials might want to take a look at the proposal. It sure looks good to us.

Snapshots versus movies. We understand, from our own work, that most ratings and rankings of cities and states are based on one set of recent data, so they only capture pictures of events. We bring this up because the latest “entrepreneurship rankings” from the University of Nebraska-Lincoln dropped Louisiana from No. 5 in the country in 2010 to No. 50 in 2011. Absent a mass exodus of entrepreneurs -- kind of like money-seeking lemmings climbing into the sea -- how is such a change possible?

The study explains that, "A sharp decline in the number of establishments was a big part of the reason. … The number of establishments grew rapidly in 2010 but then declined sharply in 2011. This pattern may have reflected a surge in businesses to address the cleanup from the 2010 oil spill in the Gulf of Mexico.”

That’s fair enough, but it still leaves us wondering what readers of the study thought when they heard that Louisiana was number five? Did they assume that entrepreneurship was part of the state’s ethos? Lesson: Before you put too much stock in a ranking of any state, make sure you’re aware of any exogenous factors that might influence it.

“The people of one county cannot be indifferent to the welfare of the people in another county.” -- Thomas Jordan Jarvis, North Carolina’s governor from 1879 to 1885.

When our kids were playing organized sports, we became aware that the reputation of the coach, among parents, varied wildly depending on whether the team won or lost. In fact, when we were Little League coaches, we had the good fortune to win the first three games of the season, giving us immunity from much parental grief in the weeks to come.

It turns out that the same phenomenon may exist with the public’s faith in government. A recent Gallup poll estimates that 65 percent of Americans have expressed a “great deal” or “fair amount” of trust in their state governments. “Confidence in state government is among the strongest seen since Gallup started the poll in 1997,” according to Governing’s Dylan Scott.

The conclusion that seems to flow from this is that people have more faith in government (and coaches) when factors largely out of their control (like the economy or in the coaches case, the players’ performance) -- are positive.

Academics take note: The Center for Accountability and Performance (part of the American Society of Public Administration) is gathering case studies, written by graduate students, “to advance the knowledge and understanding of agency and organization efforts to improve performance management, strategic planning, and program evaluation.”

As CAP’s website indicates, “The development of these case studies may also advance the knowledge, experience, and understanding of these areas by the Graduate Students who develop the case studies, and they will most likely advance the organizational learning by the host agency or organization. In addition, these case studies can be a source of knowledge transfer between the research community and the practitioner community.”

This seems like a great opportunity to us. For more details, see CAP’s website. (Truth in advertising: the “G” in “B&G” is a CAP board member).

We want to extend our sympathies to family, friends and colleagues of Gary Olson, the late director of the Michigan Senate Fiscal Agency and staff chair of the National Conference of State Legislatures from 2002-2003. He passed on several weeks ago, at age 57. We know that we weren’t the only ones to benefit from Gary’s patient wisdom, but he was always willing to pick up the phone when we called and was then very willing to share his time. Whether it was a Michigan matter or a national topic, his perspective was nearly always on target. He’ll be missed.